But what gives me pause is that a some of the mag 7 (think Meta) could change their mind on AI build-out tomorrow, and 1-year from now have the same amazing free cash flow they always did.

I would naively expect Microsoft’s to be the highest since they are probably mainly just selling access to their capex through cloud since they aren’t seriously pursuing frontier AI, I’d imagine Google to be in the middle (selling TPUs, general cloud GPUs, Gemini, revenue lift on ads from better AI) but also spending heavily on infra to compete with OAI/ Anthropic, and then Meta to be on the low end since they are likely getting serious revenue lift from AI but not monetizing their models by API.

Page 8 for Oracle's free cash flow trending negative is really quite impactful. The Bloomberg AI bubble diagram [1] shows how this could really blow up. If Oracle falls they could take the whole market with them. We're just waiting on the mag 7 or any closely linked companies to fail to raise investment.

Page 16 really outlines how insane these evaluations are. I think most countries see it, hence aggressive selloffs of US bonds [2]. But everybody is just too insanely heavily exposed to it all now, it's going to wipe out everything. It's going to be a very awful time when heavily debt strapped countries can't issue debt anymore.

I think what we're going to see is some insane moves to keep these companies afloat longer in some desperate attempt to delay the pop, which will just make a bigger bubble. I could see Nvidia for example issuing bonds in excess of $100bn soon if the market has appetite for it [3].

[1] https://archive.is/0bYLS

[2] https://sg.finance.yahoo.com/news/china-japan-uae-india-sell...

[3] https://uk.finance.yahoo.com/news/nvidia-raises-over-21-5bn-...

“Do they make money? I don’t know but I know they’re magnificent!”

Mag7 is just an arbitrary list of companies that were coined at a specific time with no rigor.

If you must do rigorous analysis, then just like S&P 500 you need to add drop BigTech / High Growth companies continuously to this Mag7 (or Mag10) and then do analysis

https://finance.yahoo.com/markets/article/magnificent-7-stoc...

> The once high-flying "Magnificent Seven" are looking more like the Dreadful Seven.

> The why: Wall Street is growing increasingly impatient with Big Tech's astronomical capital expenditures on artificial intelligence, projected to balloon 70% to exceed $700 billion this year.